Mumbai: With just a few months left for the Reserve Bank of India, or RBI, to decide on whether to open the country’s financial sector to foreign banks, there is
Expert view: (top, from left) Panelists K.C. Chakrabarty, chairman of Punjab National Bank; Sanjay Nayar, CEO of Citigroup India; K.V. Kamath, managing director and CEO of ICICI Bank; Tamal Bandyopadhyay, Mint’s Mumbai bureau chief; O.P. Bhatt, chairman and managing director of State Bank of India; Neeraj Swaroop, CEO of Standard Chartered Bank; and Gunit Chadha, managing director and CEO of Deutsche Bank at the Mint Annual Banking Conclave held in front of an invitation-only audience in Mumbai on Monday; (below) Nayar, Chakrabarty, Chadha, Kamath and Bhatt share a light moment before the conclave begins; (above) Chadha, Kamath and other panelists head for the discussion table. While Chadha insisted that foreign banks can indeed participate in financial inclusion in a much more cost-efficient manner if they are allowed to enter semi-urban and even rural areas, Bhatt warned that India’s development goals using public sector banks will be hampered if foreign banks are allowed to enter the country en masse and significantly ramp up competition. Abhijit Bhatlekar / Mint
little consensus among bankers from some of the largest public, private and foreign banks on the much anticipated issue.
At Mint’s fifth Clarity Through Debate series, top executives of State Bank of India, or SBI, ICICI Bank Ltd, Punjab National Bank, Citigroup, Standard Chartered Bank and Deutsche Bank AG discussed “Should the Country Open Up the Financial Sector?”.
The panelists at the Mint Debate, held on Monday in front of an invitation-only audience here, were, however, clear that more Indian companies shouldn’t be allowed into the country’s banking sector and that the best route to allow the foreign banks in India to expand would be through setting up of a wholly owned subsidiary.
But the current guidelines about such subsidiaries of foreign banks are not clear and need to be modified before foreign banks can consider that route, said several of the bank CEOs participating in the Mint Debate moderated by Tamal Bandyopadhyay, who writes the Monday Banker’s Trust column and is also Mint’s Mumbai bureau chief.
The Indian banks’ charge was led by K.V. Kamath, managing director and CEO, ICICI Bank, who said India is a far more open country than most developed countries when it came to bank licences, and that the same level of reciprocity given to a foreign bank in India is never awarded in most countries to Indian banks looking to expand overseas.
Kamath said that out of the 18 countries that ICICI Bank operates in, 16 — including several developed ones — aren’t as welcoming as India has been towards foreign banks. “We need to ask this question, ‘why are these markets closed, why should we open?’” he said. “If they want to access our market, they should allow us to access their market as well.”